Author Topic: When your house is your retirement plan...  (Read 2454 times)

ducky19

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When your house is your retirement plan...
« on: June 26, 2018, 11:00:19 AM »
This one showed up in my feed a couple of days ago. The couple in the article are 69 (him) and 65 (her). Their home, with a market value of $791,000, accounts for 94% of their net worth. (I did the math using all of the numbers given - it's actually 98.75% of their net worth). They bought the home for $59,500 in 1983 and "they currently owe about $215,000 on the home after refinancing three times over the years to convert equity to cash – money that they spent on remodeling, repairs and other bills. They also owe $20,000 on a low-interest, secondary loan on the home."

Some other gems:

"He earns about $50,100 a year before taxes and withholding. He also participates in his employer’s 401(k) retirement savings plan, with a current account balance of about $3,000." - Wait, what? Dude is 69 years old and has three fucking grand in his 401k???

"The Weddells’ second-largest asset is a $50,000 savings account at a brick-and-mortar bank. The bank’s annual percentage yield on savings accounts ranges between 0.03 percent and 0.06 percent..." Seriously? No words...

And my favorite...

"The Weddells have already started reducing their spending, starting with their grocery bill. They also realized they were spending about $400 a month (emphasis mine) on digital programming, such as Netflix and Redbox.

'We don’t live this luxurious lifestyle,' Kathryn said. 'We just live a normal life.'"

How the hell do you spend $400 a MONTH on Netflix and Redbox??? So much trainwreck...

https://www.seattletimes.com/business/house-rich-savings-poor-and-eyeing-retirement-bellevue-couple-ponders-options/

Sibley

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Re: When your house is your retirement plan...
« Reply #1 on: June 26, 2018, 11:06:01 AM »
Well, they're going to hit a brick wall at some point. Hopefully before they run out of money and are living exclusively on social security.

alanB

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Re: When your house is your retirement plan...
« Reply #2 on: June 26, 2018, 12:27:58 PM »
So this guy makes $50K gross, plus (2000+750)/month x 12 = $33K from social security.

Quote
He estimated that they were running about $700 a month in the red. They were tapping their savings account to make up the difference.

Marshall’s first order of business was to urge the Weddells to cut their monthly spending by $1,000, to about $4,000 a month.

So if they spend $5000/month = $60K/year, how could they be "in the red" $700/month?? I really hope you could net at least $27K on a $50K salary to supplement the $33K from SS.

We need this guy to come on and do a case study!!

talltexan

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Re: When your house is your retirement plan...
« Reply #3 on: July 02, 2018, 11:53:47 AM »
anyone else hear $550,000 in home equity plus full social security benefits? A median-income lifestyle is still within reach for them, by selling the house and moving to a LCOL area. Perhaps that was the plan, or [more likely] there was never a plan.

Slee_stack

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Re: When your house is your retirement plan...
« Reply #4 on: July 02, 2018, 01:29:49 PM »
No doubt that someone likely could live OK on house equity alone...but as talltexan points out, an LCOL move is probably in the cards.

If folks really do plan to do that, good for them.  I'd personally feel a little uncomfortable with nearly all my eggs in a personal residence though.

If the couple in the story does net $400k-ish from a sale and are collecting $33k in SS, they could very well make it work in a cheaper place.

They better embrace those lifestyle adjustments pronto!


bebegirl

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Re: When your house is your retirement plan...
« Reply #5 on: July 02, 2018, 05:01:18 PM »
Oh my! Thanks for sharing!

In their place I would immediately stop working, apply for social security, sell the house asap before next bubble bursts and move for Retirement to Spain or Portugal. Jaysus!

I continue reading... Instead of retiring somewhere in the sunshine they plan to remodel the house yet again and move to the basement(!) in order to rent out the first floor of the house. Goodness!
« Last Edit: July 02, 2018, 05:08:40 PM by bebegirl »

marty998

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Re: When your house is your retirement plan...
« Reply #6 on: July 05, 2018, 03:44:11 AM »
No doubt that someone likely could live OK on house equity alone...but as talltexan points out, an LCOL move is probably in the cards.

If folks really do plan to do that, good for them.  I'd personally feel a little uncomfortable with nearly all my eggs in a personal residence though.

If the couple in the story does net $400k-ish from a sale and are collecting $33k in SS, they could very well make it work in a cheaper place.

They better embrace those lifestyle adjustments pronto!

No comment on expenses, I'm only replying to suggest this is a major topic of debate in Australia. Old people sit on houses worth millions and still claim welfare because they are "income poor".

You can eat equity. Sure it is a little riskier, but it is a valid option. The fact we don't force people to eat their equity means the young tax-payer* is the loser in all of this.

*Unless they are lucky enough to inherit the old geezer's house.

SugarMountain

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Re: When your house is your retirement plan...
« Reply #7 on: July 09, 2018, 05:34:11 PM »

And my favorite...

"The Weddells have already started reducing their spending, starting with their grocery bill. They also realized they were spending about $400 a month (emphasis mine) on digital programming, such as Netflix and Redbox.

'We don’t live this luxurious lifestyle,' Kathryn said. 'We just live a normal life.'"

How the hell do you spend $400 a MONTH on Netflix and Redbox??? So much trainwreck...

https://www.seattletimes.com/business/house-rich-savings-poor-and-eyeing-retirement-bellevue-couple-ponders-options/

I suspect that includes cellphones, cable, internet netflix etc.  Still crazy high, but it's not that unusual.  Lots of people have $150-200/month cable bill.  Internet is another $50-100.  Cell with two lines maybe $100-150.  And you're up at $400/month.

craiglepaige

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Re: When your house is your retirement plan...
« Reply #8 on: July 09, 2018, 06:06:27 PM »
 60+ years old and still thinking about remodeling, why? Sell, sell, sell. Am I the only one who sees 60+ years and automatically thinks of "borrowed time"?
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